1. cccu.ltd is considering purchasing a new piece of equipment. The expected purchase price is 70,000 and the expected scrap value is 10,000. The profits resulting from this 4 year project are as follows: Year 1 15,000 Year 2 15,000 Year 3 25,000 Year 4 15,000 Calculate the Payback Period. (5 marks) Year 1 2. Investment appraisal refers to :- (3 marks) a. Making sure that the company only invests in profitable projects. b. Evaluating the costs and benefits of proposed investments. c. Making sure that the investments pay back as quickly as possible. d. Making sure that the company increases its operating profits. 3. A project would normally be recommended for acceptance if the Net Present Value is:- (3 marks) a. Greater than the current Return on Capital Employed. b. Greater than zero. c. Grater than 1. d. Less than zero. 4. Which of the following Investment Appraisal methods considers the time value of money? (3 marks) a. Accounting Rate of Return b. Net present value method. c. Payback Period d. None of the above consider the time value of money. 5. A manufacturing organisation is considering purchasing a new piece of equipment. The expected purchase price is 125,000 and the expected scrap value is 15,000. The machine is expected to last for 4 years and the profits generated are forecast to be as follows: Year 1 35,000 Year 2 40,000 Year 3 45,000 Year 4 30,000 Calculate the Accounting Rate of Return. (5 marks) 6. A company is considering purchasing equipment to the value of 175,000. This equipment qualifies for Written Down Allowances on a reducing balance of 25% per annum. It is expected that the equipment will have a life of 5 years and that it will be worth 10,000 at the end of the project. Calculate the Written Down Allowance that could be claimed in Year 3. (5 marks) 7. You are given the following information regarding shares in Christ Church plc: Economic State Possible Return Probability 10% year on year growth 12% 0.1 Better than average growth 10% 0.3 5% year on year Growth 25% 0.4 Recession -10% 0.2 What is the Expected Return of shares in Christ Church plc? (5 marks) 8. The forecast returns and associated probabilities of two shares are as follows: Share A Share B Probability Return Probability Return 0.3 -10% 0.3 18% 0.4 20% 0.4 5% 0.3 15% 0.3 0% What is the Expected Return of Share B? (5 marks) 9. Using the information from Question 8 what is the level of risk associated with Share A? (5 marks)